Chicago and Indiana Signaling That We Are Next For a Price Hike

Comment on the February 25 prediction: I ended that post with “I’m not expecting a fresh price hike this coming week”. I am taking that back now.

Wednesday, February 28, 2024, 8:00AM: I’m not sure why, but wholesale prices have risen almost a quarter a gallon in the past several days, and with price hikes already this week in Chicago and Indiana, it’s clear to me we are next, probably later this morning. $3.49 is not out of the question. Fill up now if you see this post. -EA

Do We Need to Worry About Costco? No.

Comment on the February 15 prediction: “Safe for the next several days” was correct on the 15th, but we did get a modest reset on the 22nd, to $3.29. So, I am going to say the prediction was CORRECT, but barely.

Sunday, February 25, 2024, 5PM: Looking at the data, there was no urgency to the price hike on Thursday, and in fact, several areas in west Michigan stayed close to $3, which looks like is the 0-cent margin price right now. A good check on this is Costco, which has been committed for years to selling gasoline (and hotdogs!) at or below cost, and at the moment, we see they are near $3. I mention Costco because this article came my way the other day, with this quote about their gas prices: “Basically, the CFO admits that Costco wants to be a relative bargain when it comes to gas, rather than offering the lowest price possible.” I guess in some parts of the country, Costco tacks on a bit of extra profit per gallon, but you know, I haven’t seen it here. Maybe I should start tracking them.

Unless we get some weirdness with oil prices or a dysfunctional refinery, I’m not expecting a fresh price hike this coming week. -EA

The March to March Continues

Comment on the January 28 prediction: Perfectly CORRECT, with a hike to $3.09 on January 29.

Thursday, February 15, 2024, 11AM: Sorry for the lack of postings so far this month. I traveled to the Tampa area of Florida for a week, and I’ve been very busy at work. In Florida, prices were similar to Michigan, and they are all-in there with the “10 cents extra for credit card purchases” premium that we see closer to Detroit.

Let’s reset where we are at with gas prices. We are clearly in the space above $3 a gallon, after the $3.09 hike on January 29 and a $3.29 hike a week ago. Those hikes appear to be connected to some regional issues with a refinery, because overall, the price of oil has been pretty steady.

Or, it has to do with the usual “March to March”: gas prices bottoming out in December each year, and then starting to work higher throughout the winter. Actually, it’s more like “The March to June”, but that doesn’t make as good a headline.

Looking at wholesale prices in the region, I think we are safe the next several days from a price reset. I think we’ll see some $2.99’s this weekend in Kent County, but that probably sets up a price reset next week, back to $3.29. -EA

Stars Are Aligning for a Hike Back Above $3

Comment on the January 21 prediction: Pretty much CORRECT, as prices slid below $3 in most places in west Michigan and stayed much lower in the Grandville/Jenison area.

Sunday, January 28, 2023, 2:00PM: The price of a barrel of oil rose $5 last week, but wholesale gas prices didn’t do anything. The stock price of gasoline producer Valero (VLO) jumped, though, usually a sign that gas prices are rising, or are about to. It appears the stars are aligning for a price reset by Wednesday, perhaps to $3.09, but maybe $3.19. Gas is still $2.62 in Grandville today (hint, hint). -EA

We see what you did

Comment on the January 15 prediction: On Tuesday, most other west Michigan stations followed the stealth hike to $3.09, so I was WRONG.

Sunday, January 21, 2023, 3:00PM: Go Lions! So, on Tuesday the 9th, there was a wholesale spike in the Midwest, adding more than 20 cents a gallon across the board, even though oil prices held steady. This hike was connected to the storm that came through a few days later, dumping a lot of snow and bringing below-zero temperatures. I thought we’d get an adjustment down after the storm was done — this is the way it usually works with hurricanes in the South, but wholesale prices have remained stubbornly high, so now we are dealing with typical prices over a few percentage points over $3. What’s next? The stations that did not participate in the hike, and there are a few, have gas as low as $2.62 today, and that is consistent with the floor we have calculated.

What a range right now, and looking back over my 2023 data, it seems that the retailers were somewhat successful sneaking in a margin boost when we were enjoying that significant drop in prices in August-September. To be more precise, hikes have been coming with retail prices near a 20-cent margin, rather than a 0-cent margin, utilizing my formulas. Part of it may be that the “middleman” estimate I use for transportation and storage needs to be adjusted upwards. If competition could push back against this new dynamic, I would say we have quite a way to fall, back to the low $2.60’s. Otherwise, it is more like the low $2.80’s.

Given all the stations over $3 still, the chance of a fresh hike this week seems low. Best strategy for drivers in Kent County is to find their way to Grandville, where there seems to be the most competition right now. -EA

Wide Range of Prices Open the New Week

Comment on the January 7 prediction: Pretty much CORRECT, as prices reset last Monday. But, we saw $2.99 instead of $2.89.

Monday, January 15, 2024, Noon: There was a spike in wholesale prices Wednesday in the Midwest, which seemed to be tied to the big storm that we faced this weekend. Today, trading markets are closed, so we won’t know until tomorrow about wholesale prices, but I suspect they will drop. Meanwhile, a handful of stations here in Kent County tried a small second hike to $3.09 over the weekend, but I don’t think it is going to amount to anything. Then there are other stations that were never enthusiastic about last week’s price hike and are in the $2.60’s. My prediction is to see stations above $2.89 cut their prices some this week while wondering if some of those in the $2.60’s look to raise their prices. The latter rarely happens without a system-wide reset, though. -EA

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